Telkom has been under fire for years about its high telecoms pricing. This is particularly relevant in the broadband market where Telkom’s ADSL prices remain stubbornly high in comparison to similar offerings in the developed world.<\/p>\n
At the 2009 SATNAC conference in Swaziland, Telkom CEO Reuben September was quizzed about Telkom’s pricing, and he indicated that the company is committed to passing operational savings on to consumers. <\/p>\n
September said that any business that can not reduce its costs, and pass these savings on to consumers, will suffer in the long term. The Telkom CEO added that the reduction of costs is fundamental to Telkom’s business strategy.<\/p>\n
The CEO however issued a word of warning saying that a price war can damage businesses and hinder investment. According to September Telkom was involved in a price war in Africa, through its subsidiary Multi-Links, which was detrimental for business.<\/p>\n
Over the last few years Telkom has steadily lost fixed line customers, but has launched mobile and fixed wireless services which the company hopes will compliment its current fixed line offerings. While the company’s fixed line offerings are considered pricey, if compared to international offerings, the incumbent has undercut the mobile operators’ tariffs on cellular products.<\/p>\n
At the same conference Neotel CTO Dr. Angus Hay said that the reduction of interconnect rates is critically important to ensuring lower telecoms prices. According to Hay most telecommunications providers currently have no control over the call termination rates, something which effectively keeps call rates high. <\/p>\n
Hay warned that unless telecoms operators drop call rates, people will increasingly use applications like Skype- which completely bypass current interconnect structures – to communicate with each other. “We must bring interconnect rates down to what is fair to consumers,” said Hay.<\/p>\n